July 15, 2021—Just over halfway through the year, 2021’s already been a wild ride for the aftermarket. In the wake of a global pandemic the prices of used cars are surging as consumers flock to buy their own “personal PPP” and rush hour’s returned as drivers across the country venture back out on familiar daily commutes and embark on lengthy road trips.
So, after a year filled with transition, what’s changed in terms of the factors that shape the modern aftermarket? Experian Automotive’s recently released 2021 Q1 Market Trends Review takes a closer look.
While the report covers everything from U.S. vehicles in operation (VIO) change by model year (MY) to electric vehicle registration market share, a few notable findings stood out.
New vehicle registrations increased 20 percent in Q1 compared to 2020 and used vehicle registrations increased over 25 percent.
There was a noticeable shift in new vehicle registrations by generation. Generation X made up the largest segment of new vehicle buyers in Q1, growing significantly from 29.3 percent in 2020 to 32 percent in 2021, and millennials buyers decreased slightly from 27.8 to 27.3 percent.
But perhaps the report’s biggest takeaway for repair shop owners? The aftermarket sweet spot has grown 7.2 percent year-over-year.
For more insight on what the report’s insights could mean for the aftermarket in the months and years ahead Ratchet+Wrench checked in with Experian’s senior automotive consultant Marty Miller.
How long can we expect to see this new sweet spot growth last?
In analyzing the data from Q1 we saw many of the trends we’d predicted hold true and come to fruition, including the growth of that aftermarket sweet spot—or the vehicle that will start to be in need of some major repairs in the six to 12-year age range—and based on our analysis, we predict we’ll continue to see growth in that metric for the next three years. That’s three years of big growth opportunities for aftermarket businesses and service opportunities for repair shops. That being said, present day challenges like the ongoing chip shortage could have an impact in the near future.
How does today’s growth compare to spikes the industry’s experienced in the past?
Looking back through past data, we were able to see that there was a similar peak the industry experienced back in 2008 that relates most closely to what we’re anticipating today and going forward.
Back in 2011 we actually reached a sweet spot volume of 104 million vehicles and today we’re currently sitting at 94 million. We may currently be trailing that high by 10 million vehicles, but I expect that in the next few years our sweet spot peak will have reached higher than that 104 million to fall in the 106 million or 107 million range.
What’s likely to follow that growth?
A few years down the road we’re likely to start seeing a slight decline with consideration for some of the major global events that have impacted the industry in the last year or so alone—events like the chip shortage and a global pandemic are going to leave a mark—but we don’t expect to see those effects immediately, so the larger impact is likely to come further down the line, whatever that might look like.
